Aug 12, 2021
Polars uniqueness: Guaranteed trading volumes on the platform.
In previous articles, we talked about the updates that we made in anticipation of the launch of the main network, and also burned 400 million POL tokens, thereby optimizing the tokenomics. In this article, we will tell you how the unique polar tokens model allows you to guarantee trading volume on the platform even in the absence of real betters. Let’s start!
We really can guarantee that there will be trading volumes on the Polars platform as soon as the mainnet launches, even if there are no players or bettors on it. In order to understand why this is so, we propose to consider a hypothetical example.
Example
Let’s imagine the platform is running. Starting price of polar tokens in the Prediction Pool:
WHITE — $0,5
BLACK — $0,5
Remember that after the last update, users do not need to add liquidity to the Prediction Pool. Users add liquidity only to the Trade Pool. So, we added $ 200k of liquidity to the Trade Pool by purchasing WHITE and BLACK tokens from Betting Pool. Starting price of polar tokens in the Trade Pool:
WHITE — $0.5
BLACK — $0.5
Next, we fire events one by one. Let’s imagine that Black Team won the first event. New Polar Token Price in Prediction Pool:
WHITE — $0.475
BLACK — $0.525
In the Prediction Pool, the price changes automatically and is fixed but in the Trade Pool, the price remains the same, since it is the market price. The price of polar tokens in the Trade Pool after the end of the first event:
WHITE — $0.5
BLACK — $0.5
What do we see? We see that we have unique opportunities for an arbitrage deal.
- The user will buy WHITE tokens in the Prediction Pool at a fixed price of $0.475, and sell them in the Trade Pool at a price of $0.5, until the price in the Trade Pool will not equal the fixed price of the Prediction Pool.
- The user will buy BLACK tokens in the Trade Pool for $0.5 and sell them in the Prediction Pool at a fixed price of $0.525. He will do this as long as the price of the Trade Pool will not equal the fixed price of the Prediction Pool.
- If $200k of liquidity is added to the Trade Pool, the user will have to make a trading volume of about $10k in order to equalize prices between the pools. The more liquidity is added to the Trade Pool, the higher the underlying trading volume will be.
As you can see, there is no need for users to bid in order for the Polars platform to have trading volume. The more liquidity is added to the Trade Pool, the more trading volume will be after each event ends. It is also worth considering that there will be about 10–15 events per day. Consequently, the price of tokens will change approximately 10–15 times a day. Consequently, arbitrage transactions will be executed after the end of each event, increasing the base guaranteed trading volume of the Polars platform.
For each transaction, the user pays a commission of 0.3%. Recall that commissions are distributed as follows:
Prediction Pool:
40% — POL buyback and burning
40% — Buyback and distribution among POL Holders.
15% — Operator’s commission (maintaining the functionality of smart contracts, network commissions, payment of data providers)
5% — Increase the сolaterization of polar tokens (WHITE and BLACK)
Trade Pool:
70% — Liquidity providers who have added liquidity to the Trade Pool.
30% — Buyback and distribution among POL Holders.
Conclusions
Ultimately, we managed to create a very efficient model for the Polar Token protocol. The fixed price in the Betting Pool, the market price in the Trade Pool, and the regularity of events that constantly change prices create a unique environment for constant arbitrage opportunities, which provides the platform with a constant guaranteed trading volume. Providing liquidity to the Trade Pool is now becoming extremely profitable, since you know for sure that you will receive 70% of all commissions that were paid during the guaranteed trades. When you add to this the power of fundamental farming and the ongoing buyout and burn of POL tokens, the benefits can be even more tangible. We hope you now understand the uniqueness of the protocol and thank you for your support!
Polars
The new DeFi platform for creating secure polar tokens, the price of which depends on the results of specific external events. Within the POLARS platform, users can buy, sell and exchange polar tokens, as well as participate in the distribution of the platform’s commission income.
